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Feb. 8, 2008: New Survey Scrutinizes Business Conditions

February 8, 2008
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WASHINGTON - The National Association for Business Economics’ (NABE’s) January report presents the responses of 98 NABE members surveyed about business conditions in their firm or industry conducted Dec. 13-Jan. 9. The survey also reflects fourth-quarter 2007 results and the near-term outlook.

NABE asked members the following:

• How did business activity by sector in the third quarter compare to the second quarter? What lies ahead?

• Are costs for material inputs and labor still rising? Are firms achieving price and/or profit increases?

• Are hiring and capital spending still rising? What is the outlook for the coming 6-12 months?

• Will the housing bust continue? Will it have a widespread impact on other sectors?

• How are tightening credit conditions affecting businesses?

• How has the decline in the dollar affected businesses and what are their expectations for 2008?

“The January NABE Industry Survey shows a striking dichotomy,” said Ken Simonson, chief economist, Associated General Contractors of America (AGC). “Compared to the October survey, respondents are much gloomier about the outlook for the economy as a whole but are more upbeat about their own firms’ pricing, capital spending, and hiring plans. Although nearly all panelists expect the housing slowdown to continue, fewer than [those participating] in October expect their business to be affected. Neither tight credit conditions nor the decline of the dollar has affected most respondents. For the 18th consecutive quarter, there were more panelists reporting rising profit margins than falling margins, even though slightly fewer firms raised prices last quarter and cost pressures for materials and wages remained steady.”

According to Simonson’s view of the report, tight credit market conditions appear to be having a more limited affect on the economy compared with the October survey. Two-thirds of respondents stated that tightening credit conditions have not affected their business, while just over a quarter reported negative affects. Just under half of the respondents expect a further substantial slowdown in housing markets, and only three percent do not expect any further slowdown. Fewer respondents in January (42 percent) than in October (51 percent) felt that a slowdown, mild or severe, would have an affect on their business.

For more information, visit www.nabe.com.

Publication date: 02/04/2008

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